Failure of Structural Adjustment Programme

INTRODUCTIONAccording to Collin dictionary government is the group of people who are responsible to govern country. Christian council of Tanzania and Tanzania Episcopal conference define government as the chief agency for organizing and in the end of controlling both development and order in the society. Also it is an organized body of persons and institutions that form an agency or machinery of the state which formulates, expresses and realizes the will of state. Therefore, government consists of the activities, methods and principles involved in the governing a country or other political unit. Government failure is the public sector analogy to market failure and occurs when a government intervention causes a more inefficient allocation of goods and resources than would occur without that intervention. Likewise, the government’s failure to intervene in a market failure that would result in socially preferable mix of output is referred to as passive government failure (Weimer and Vining, 2004). The failure is an outcome of policies enacted to regulate trade which create systemic inefficiencies and economic cost that adversely affect a product‘s manufacture and sales. This arises when government has created some inefficiency because it would not have solved a given problem or a set of problems more efficiently. The government supply side failures largely result from principal/agent problems. Market failure - occurs when the supply of a good or service insufficient to meet a demand. A market failure result when prices cannot achieve equilibrium because of some distortions for example, the limits on specific goods and services. In other words, government regulations implemented to promote social wellbeing inevitably result in a degree of market failure. Structural Adjustment Programme are economic policies which countries must follow in order to qualify for new World Bank (WB) and International Monetary Fund (IMF) loans and help them make debts repayments on the older dept owed to commercial banks, governments and World Bank, (Whirled Bank Group, 2003).

THE CONDITION OF THE COUNTRY BEFORE STRUCTURAL ADJUSTMENTAfter independence in 1961, the new government adopted the colonial style of economic structure. Between 1960 and 1962, for example agriculture contributed more than 50% to gross national product (GNP), and sisal, coffee, cotton and tea contributed 60% to the total foreign exchange earnings (Taube 1992). Tanzania neglected not only to satisfy its own national food requirements, but also to diversify its export products and promote light manufacturing. Politicians were soon overtaken by the reality of severe deficiencies in the supply of food products, energy, housing, manufactured goods, health and educational services, as well as intermediate inputs and implement for the agricultural sector. Between 1961and 1966 Tanzania economy operated primarily under free market conditions and the government adopted the World Bank’s transformation approach to agricultural development as a component of its first five year plan (Wenzel and Wiedemann 1989). In 1963 Tanzania implemented the Agriculture Product Board Act, which was the government’s marketing board for scheduled crops. This board managed maize, wheat, rice, cashew nuts and oil seeds through market purchase, price regulation, and regulation of storage, transport and processing (Bryceson 1993).

DURING ARUSHA DECLARATIONIn 1967, the ruling party (TANU) which nowadays is Chama Cha Mapinduzi (CCM) passed the first national economic declaration establishing Tanzania’s era of economic socialism. This was the Arusha Declaration. This clearly meant to address the deficiencies in Tanzania’s economic development, but it explicitly enclosed socialism and a planned economy, which the country’s new leaders thought appropriate at the time. Ujamaa (familyhood and relationship) became the expression for Tanzanian‘s social economic system and a synonym for Tanzania socialism....

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...Introduction
Throughout this assignment I will discuss StructuralAdjustmentprogrammes (SAPs) in different economic regions of the world. I will be looking at Tanzania, which is part of the SADC, To truly understand this, one must first understand what SAPs are.
“StructuralAdjustmentProgrammes (SAPs) are economic policies for developing countries that have been promoted by the World Bank and International Monetary Fund (IMF) since the early 1980s by the provision of loans conditional on the adoption of such policies. Structuraladjustment loans are loans made by the World Bank. They are designed to encourage the structuraladjustment of an economy by, for example, removing “excess” government controls and promoting market competition as part of the neo-liberal agenda followed by the Bank.” (World health organisation , 2013)
Tanzania
Economic region: SADC
History that lead to StructuralAdjustmentProgramme
During the 1960's and '70's, Tanzania implemented policies of self-reliance. These included nationalization and price controls. They experienced growth in a short period of time, but a long-run economic downturn. “By the 1980's Tanzania was the world's second poorest country in GDP per capita terms.” (Tanzania, 1996)At that time, Tanzania’s natural resource base became threatened....

...StructuralAdjustment Programs
“In theory, SAPs are meant to assist countries to return to economic recovery. In practice, the opposite has happened. SAPs have destroyed any chance to achieve sustainable economic development that would meet national priorities...IMF-World bank reform packages constitute a coherent program for economic and social collapse…They destroy the entire fabric of the domestic economy’” -
Herbert Jaunch, Labor Resource and Research Institute (LaRRI), Namibia
To find the multiple roots of the debt problem in Africa, you have to go back to the European colonial administration of Africa. Many of the colonial powers were only in Africa for resource extraction. Because of that, the people of Africa were only trained in one area of work, and adding to that problem, nearly all of the profits of the country bypassed the workers and went directly to the European colonial powers. When the colonial powers left Africa, many of African countries were taken over by leaders that were even more corrupt than the aforementioned colonial powers. They kept exporting products, but they kept all the profit for themselves. This caused great disparity between the ruler's wealth and the common people, causing many of the countries to sink into grave poverty.
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...introduced some measures in order to bring about a balanced economic structure. And one the economic measures is the StructuralAdjustmentProgramme (SAP) which was introduced on 26th September 1986.
HISTORICAL BACKGROUND OF SAP IN NIGERIA
Nigeria had experienced a period of healthy increases in exports in 1970s. And thereafter, the growth slowed and then plunged into negative levels between 1981 and 1986. Even agricultural exports slipped, from a previous healthy position to a dismal one in the 1980s. The nation also lost ground in its exports of ores and minerals. Only in oil did Nigeria improve its export share. Curiously, Nigeria failed to diversify her export base but continued to rely heavily on oil exports, because of the easy cash it generated. By the mid 1980s, symptoms of the economic malaise were evident almost everywhere. Nigeria was in recession. The returns to World Bank and other donor agencies’ investment projects were very low in Nigeria, and many of these projects failed to generate a positive rate of return. The physical infrastructure, already poor, deteriorated from lack of maintenance, and the quality of government services suffered; health and education indicators though quantitatively increasing, their quality fell below the minimum accepted global standards. Clearly, it was time for the Nigerian economy to begin an adjustment. Many reasons are responsible for the problems,...

...﻿ISSUES OF PAKISTAN ECONOMY
ASSIGNMENT
TOPIC:
STRUCTURALADJUSTMENTPROGRAMMES
SUBMITTED TO
Ms. Ayesha
SUBMITTED BY
Syeda Sasha Sohail
BSc. Economics
Semester VII-A
DATE OF SUBMISSION
23th September, 2013
KINNAIRD COLLEGE FOR WOMEN
StructuralAdjustment Programs
StructuralAdjustmentProgrammes (SAPs) are economic policies for developing countries that have been promoted by the World Bank and International Monetary Fund (IMF) since the early 1980s. StructuralAdjustment Policies are economic policies which countries must follow in order to qualify for new World Bank and International Monetary Fund (IMF) lower interest rates loans and help them make debt repayments on the older debts owed to commercial banks, governments and the World Bank.
Measures Imposed Under SAPs
Although SAPs differ somewhat from country to country, they typically include:
A shift from growing diverse food crops for domestic consumption to specializing in the production of cash crops or other commodities (like cotton, coffee, copper, tin etc.) for export;
Abolishing food and agricultural subsidies to reduce government expenditures;
Deep cuts to social programmes usually in the areas of health, education and housing and massive layoffs in the civil service;
Currency devaluation measures which increase...

...Structuraladjustments are the policies implemented by the International Monitory Fund (IMF) and the World Bank in developing countries. These policy changes are conditions for getting new loans from the International Monetary Fund (IMF) or World Bank, or for obtaining lower interest rates on existing loans.
Conditionalities are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan. The StructuralAdjustment Programs (SAPs) are created with the goal of reducing the borrowing country's fiscal imbalances. The bank from which a borrowing country receives its loan depends upon the type of necessity. The SAPs are supposed to allow the economies of the developing countries to become more market oriented. This then forces them to concentrate more on trade and production so it can boost their economy.
Through conditionalities, StructuralAdjustment Programs generally implement "free market" programs and policy. These programs include internal changes (notably privatization and deregulation) as well as external ones, especially the reduction of trade barriers. Countries which fail to enact these programs may be subject to severe fiscal discipline. Critics argue that financial threats to poor countries amount to blackmail; that poor nations have no choice but to comply.
Definition of 'Current Account Deficit'
Occurs when a country's total...

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Like the economy as a whole, the industrial sector in Ghana has been the subject of much inquiry (in chronological order, see Birmingham et al., 1966/7; Steel, 1977; Page, 1980; Andrea, 1981; Ewusi, 1986; Meier and Steel, 1989; Steel and Webster, 1990; Mosley, Harrigan and Toye, 1991; Sowa et al., 1991 and Rothchild, 1991). As mentioned already, industrial output as a whole has been growing since the adoption of the StructuralAdjustmentProgrammes in Ghana. Within the industrial sector, it is small and medium scale industry that are increasing in proportion, and large scale industry that is static. The increase in output of the small and medium scale portion has been primarily through increase in the number of firms; entry into Ghanaian industry has been very rapid in recent years, but once established, the firms tend to remain fixed in size and employment. Large scale firms in Ghana have shown little resilience under the StructuralAdjustmentProgramme. The liberalization of imports has permitted increases in foreign products with which they compete, often with disastrous results for the local industries. A headline from a newspaper (the Weekly Spectator, number 1233, Saturday, 9 November 1991) is 'factories collapsing... over 120 out of business'. The beginning of the article reads as follows:
Over 120 industries in the country have closed...

...neoliberal policies of the World Bank and International Monetary Fund in an attempt to free the Zimbabwean economy (Bond 93). In 1991, Zimbabwe introduced what is known as the Economic StructuralAdjustment (ESAP), to stimulate economic growth and reduce poverty. The government would “de-emphasise its expenditure on social services and emphasise investment in the material production sectors such as agriculture, mining and manufacturing”(Gibbons 10). To begin economic restructuring, the Zimbabwean government received financial assistance from the World Bank (WB) and the International Monetary Fund (IMF). To qualify for assistance, the government had to meet certain requirements in the areas of “budget deficit reduction, fiscal and monetary policy reforms, trade liberalization, public enterprise reforms, deregulation of investment, and labour and price controls”(Bond 90). The people of Zimbabwe were promised that their deteriorating economy would be transformed into a strong self-sustaining one. The majority of the people were poor anyway, and did not realize to what extent they would have to sacrifice with the implementation of StructuralAdjustment Programs, said to benefit their economy and increase their standard of living (Riphenburg 1). In Zimbabwe, the Economic StructuralAdjustment Program(ESAP) has been detrimental to human development and the welfare of the Zimbabwean people,...

...STRUCTURALADJUSTMENTPROGRAMMES (SAPS)
The World Health Organization defines
StructuralAdjustmentProgrammes
(SAPs) as economic policies for
developing countries that have been
promoted by the World Bank and
International Monetary Fund (IMF)
since the early 1980s by the provision
of loans conditional on the adoption of
such policies.
LBS 120- History of Caribbean Labour
QUESTION 1
Lecturer: William Holder
Evaluate the challenges faced by
labour as a result of StructuralAdjustment Programs (SAP)
From time to time, many third world and developing countries around the world need financial
assistance, as fragile economic conditions often leave them in a negative downward spiral and
unable to meet both short and medium term fixed and reoccurring debts. When economies are in
such a bad state that they are unable to borrow from traditional international lenders then they
most often resort to the International Monetary Fund (IMF) or the World Bank for assistance in
the form of monies incorporated into a fiscal and structural agreement that outlines what each
country is prepared to undertake in order to sustainably maintain positive economies moving
forward. These conditional loans have traditionally been called StructuralAdjustmentProgrammes (SAP) and are more recently described as...